Arbitration in Turkey: Challenge of the Arbitral Award

The sole recourse against an arbitral award is by application for setting aside. TIAL provides an exhaustive list of grounds on which an award may be set aside. These are divided into two categories; ones that are to be proved by the parties, and others which a court may consider of its own initiative.

Under The Turkish
International Arbitration Law of 2001 (“TIAL”), unless otherwise agreed by the
parties, an arbitral award is to be rendered within one year from the date on
which the appointment of the arbitrator took place where there is a sole
arbitrator, or on the date on which the minutes of the first meeting are issued
where there is an arbitral tribunal. Parties may agree to prolong this
time limit before the expiration of the term. However, if the latter
fails to come to an agreement, the competent court may order the extension of
the term upon the request of either party. If the court rejects such
request, the arbitration process terminates upon the expiration of the
aforementioned period. The court’s decision in this respect is
final. Rendering an award after the expiration of the term fixed by the
parties, TIAL or the court constitutes a ground for setting aside the arbitration
award.

Pursuant to Article
14 of TIAL, an arbitral award shall contain the names, surnames, titles and
addresses of the parties and, if any, of their representatives; legal grounds
and reasons on which the award is based, amount of compensation, if any is
claimed; place of arbitration; date of the award; name(s), surname(s),
signature(s) and dissent(s) of the arbitrator(s) and finally, a statement
indicating that a set-aside procedure may be initiated against the award.

An arbitral award
must address the costs of the arbitration which includes arbitrators’ fees,
their travel and other relevant expenses, expert witness fees, costs for
on-site visits, costs incurred by the witnesses to the extent approved by the
arbitrators, attorney fees of the successful party estimated in accordance with
the minimum attorney’s fee tariff, court fees which are to be paid in relation
to the applications made under TIAL, and expenses incurred for the
notifications relating to the arbitration. Unless otherwise agreed by the
parties, costs are borne by the losing party. Where both parties are
found to be partially right, arbitrators shall allocate the costs in proportion
to each party’s success.

Challenge of the Arbitral Award

Within 30 days from
the receipt of the award, either party, with a notice to the other party, may
file an application before the arbitrator(s) to correct any material
calculation or clerical errors as well as mistakes of similar nature; or to
interpret a part or whole of the award. If the arbitrator(s) find that,
upon seeking the other party’s opinion, the request is justifiable, the
tribunal shall make the necessary correction or give interpretation within 30
days from the filing of such request. Arbitrator(s) may also make
corrections in relation to any material errors on their own motion within 30
days from the date of the award.

Furthermore, within
30 days from the receipt of the award, a party may request the arbitrator(s) to
issue an additional award in relation to claims which were propounded during
the arbitration proceedings but omitted from the award. If such a request
is found to be justified, arbitrators are to render an additional award within
60 days from the date of such request. The decision on the correction,
interpretation and the additional award is notified to the parties and forms a
part of the award.

Under TIAL, parties
have a right to request setting aside of an arbitral award within 30 days from
the receipt of the award. That said, the time starts to run from the date
on which a correction, interpretation or additional award is notified to the
parties if such a request has been raised.

The sole recourse
against an arbitral award is by application for setting aside. TIAL
provides an exhaustive list of grounds on which an award may be set
aside. These are divided into two categories; ones that are to be proved
by the parties, and others which a court may consider of its own initiative.
Accordingly, an award may be set aside if a party proves that: parties lacked
capacity to conclude an arbitration agreement; the arbitration agreement was
invalid under the law to which the parties have subjected it, failing any
indication thereon, under Turkish law; the arbitral tribunal was constituted
irregularly; the arbitral tribunal wrongly accepted or declined jurisdiction;
there existultra, infra or extra petitacircumstances; the award was not
rendered in time; or principles of due process or equal treatment of the
parties were violated. On the other hand, the court examines, on its own
initiative, whether or not the subject matter of the arbitration was arbitrable
under Turkish law and that the award is in compliance with public policy.
As seen, none of the grounds relates to the substance of the award; except for
the public policy assessment. In a recent decision dated 30 September
2015, the Supreme Court Assembly of Civil Chambers, whose decisions are binding
unlike Supreme Court decisions, delivered that even though the public policy
examination requires partial review of the award on its merits, such review
shall not go beyond examining whether or not there has been a public policy
violation, and therefore shall not constitute a review of the award on its
merits in the technical sense.

Parties may,
partially or wholly, waive their right to apply to have the award set aside
through a declaration within the arbitration clause or a written agreement
concluded after the signing of the arbitration agreement, provided that neither
party has its domicile or habitual residence in Turkey. Decisions of the
first instance court on the set-aside application are open for appeal before
the Supreme Court. That said, unless the competent court decides
otherwise, the set-aside procedure is finalised without holding any hearings;
as well as given priority and handled expeditiously.